The context of Perry’s State of the State speech is that it takes place during a governor’s race in which he is no better than even-money to win. His remarks will be closely watched for clues about how he plans to position himself in his career-risking battle against Kay Bailey Hutchison. Here are some things to look for:

* Playing defense. Will he try to mollify critics of his most unpopular actions: the Trans-Texas Corridor, support of tuition deregulation, clearing the way for coal plants, support for school vouchers, vetoing health insurance for community colleges? Each of these alienated large constituencies of voters.

* Playing offense. What will he propose in the way of legislative action? Is it going to be a menu of small-ball Republican primary issues: “Choose life” license plates, voter I.D., and eminent domain? Or will he address the big-ball problems facing the state? Will he declare any emergency issues for the Legislature to address in the first sixty days? One thing he has expressed interest in is tightening the spending cap. Another is accountability reforms, including incentive funding, for higher ed. His proposals went nowhere in 2007, and he will likely try again—with the same result.

* Funding for economic development. The Legislature and the governor start off miles apart on funding the governor’s enterprise and emerging technology funds. Neither the House nor the Senate version of the base budget bill provides any new money (beyond unexpended balances) for these funds. Perry will probably ask that that these funds receive appropriations that not only return to the previous levels but exceed them. This could turn out to be one of the big battles of the session.

* Owning up to his mistake. In March 2008 Perry announced that the state would stop collecting the tax that funds the unemployment trust fund for one year. This was a showboat gesture (“I believe in truth-in-budgeting: when government levies a tax and collects more money than is needed, we must either stop collecting the tax, return the money or both.”) that made no provision for hard times. The $90 million savings to businesses is now a several-hundred-million dollar hole in the budget that is on his shoulders. He is obliged to propose a fix.

Because of the governor’s race, Perry is under pressure to have a good legislative session. He hasn’t had one since 2003, when he backed tort reform, toll roads, tuition dereg, privatization of human services funding, and massive budget cuts to deal with a $10 billion deficit—and even that year hasn’t looked so great in the rear view mirror. Aside from economic development, most of Perry’s proposals over the years have been ideologically driven. Will he continue to showboat? Or will he show leadership?